National Penn Bancshares, Inc. Reports Fourth Quarter
2010 Results
| | · | Adjusted net income improves to 10 cents per share1 |
| | · | Net interest margin of 3.43% |
| | · | Asset quality continues to improve |
| | · | Quarterly loan loss provision declines to $17.5 million |
| | · | Classified loans and non performing assets continue to decline |
| | · | Loan loss reserve to non-performing loans increased to 179% |
| | · | Strong capital base further enhanced |
| | · | Completion of Christiana Bank & Trust divestiture |
| | · | January 2011 completion of Warburg Pincus investment |
BOYERTOWN, PA., January 27, 2011 -- National Penn Bancshares, Inc. (Nasdaq: NPBC) reported net income available to common shareholders of $6.6 million, or $0.05 per diluted common share, for the fourth quarter of 2010 compared to a net income of $10.3 million, or $0.08 per diluted common share, for the third quarter 2010. On an adjusted basis1, net income totaled $13.5 million, or $0.10 per diluted common share, which represents an increase of 12% from the third quarter of 2010. Fourth quarter adjusted net income¹ excludes the impact of an after-tax unrealized fair value adjustment on National Penn’s traded trust preferred securities (Nasdaq:NPBCO) of $1.3 million and the previously announced tax expense of $5.5 million rel ated to the divestiture of Christiana Bank & Trust. This tax expense was a non-cash charge and did not impact regulatory capital ratios. For the year ended December 31, 2010 diluted earnings per common share were $0.10 while adjusted earnings per common share were $0.30.
“The fourth quarter and full year 2010 results continue to demonstrate the improving profitability trends of National Penn and are indicative of the strength of our balance sheet,” said Scott Fainor, president and CEO of National Penn. “The strategic initiatives of divesting Christiana Bank & Trust and finalizing the $150 million Warburg Pincus investment position National Penn well for the future.”
Fundamental operating performance remained strong as the net interest margin and the efficiency ratio were comparable to previous quarters. The balance sheet contracted by approximately 2% during the quarter, exclusive of the divestiture of Christiana, as disciplined deposit pricing reduced the cost of deposits by 12 basis points through reductions in higher cost time deposits. Loan balances, exclusive of Christiana, declined by $200 million despite $292 million in new originations due to soft loan demand in this economic environment and a planned reduction in classified credits.
Asset quality trends continued to improve for the fourth consecutive quarter. Non-performing loans declined by 11% and classified loans declined by 4%. Despite a reduction in the provision for loan losses, the loan loss reserve to non-performing loans increased to 179%.
1 Adjusted net income, as used throughout this release, is a non-GAAP financial measure. Please refer to the Statement Regarding Non-GAAP Financial Measures and the attached Financial Highlights and financial data tables for additional information on this measure and a reconciliation of this measure to net income available to common shareholders, the most comparable GAAP measure.
The strength of the balance sheet is apparent not only in loan loss reserve levels but also indicated by National Penn’s capital levels. Tangible common equity to tangible assets was 8.27% and risk based capital ratio was 17.38% at December 31, 2010. Pro forma for the Warburg Pincus investment, tangible common equity to tangible assets is 9.18% and the risk based capital ratio is 18.86%. These capital and reserve levels should provide National Penn an ability to accelerate the repayment of TARP.
National Penn’s Board of Directors approved a first quarter cash dividend of $0.01 per share, payable on February 17, 2011 to shareholders of record on February 6, 2011, consistent with the $0.01 per share paid in the previous quarter.
Scott Fainor stated, “I am proud of the efforts of our employees in achieving our strategic initiatives of improving asset quality, enhancing capital levels and improving earnings of National Penn as we focused on reducing risk. As we look forward, we will stay focused on these initiatives as we continue efforts to grow despite the current economic environment.”
Media Contact: | Catharine S. Bower, Corporate Communications |
| | (610) 369-6618 or catharine.bower@nationalpenn.com |
| | |
| Investor Contact: | Michelle H. Debkowski, Investor Relations |
| | (610) 369-6461 or michelle.debkowski@nationalpenn.com |
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About National Penn Bancshares, Inc.:
National Penn Bancshares, Inc., with approximately $9 billion in assets, is a bank holding company based in Pennsylvania. Headquartered in Boyertown, National Penn operates 124 community banking offices in Pennsylvania and one office in Maryland through National Penn Bank and its HomeTowne Heritage Bank, KNBT and Nittany Bank divisions.
National Penn’s financial services affiliates consist of National Penn Wealth Management, N.A., including its National Penn Investors Trust Company division; National Penn Capital Advisors, Inc.; Institutional Advisors LLC; National Penn Insurance Services Group, Inc., including its Higgins Insurance division; and Caruso Benefits Group, Inc.
National Penn Bancshares, Inc. common stock is traded on the Nasdaq Stock Market under the symbol “NPBC”. Please visit our Web site at www.nationalpennbancshares.com to see our regularly posted material information.
Statement Regarding Non-GAAP Financial Measures:
This release, including the attached Financial Highlights and financial data tables, contains supplemental financial information determined by methods other than in accordance with Accounting Principles Generally Accepted in the United States of America (“GAAP”). National Penn’s management uses these non-GAAP measures in its analysis of National Penn’s performance. These measures should not be considered a substitute for GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with GAAP. Management believes the presentation of the following non-GAAP financial measures, which exclude the impact of the specified items, provides useful supplemental information that is essential to a proper understanding of the financial results of National Penn.
| | · | Annualized return on average tangible common equity excludes the average balance of acquisition-related goodwill and intangible assets and the average balance of preferred equity in determining average tangible shareholders’ equity. Annualized return on average tangible equity provides a method to assess management’s success in utilizing the company’s tangible common capital. |
| | · | Tangible book value excludes from total equity goodwill, intangible assets and preferred stock. Banking and financial institution regulators also exclude goodwill and intangible assets from shareholders’ equity when assessing the capital adequacy of a financial institution. Tangible book value provides a method to assess the level of tangible net assets on a per share basis. |
| | · | Adjusted net income excludes the effects of certain gains and losses, adjusted for applicable taxes. Adjusted net income provides a method to assess earnings performance by excluding items that management believes are not comparable among the periods presented. |
| | · | Efficiency ratio expresses operating expenses as a percentage of fully-taxable equivalent net interest income plus non-interest income. Operating expenses exclude items from non-interest expense that management believes are not comparable among the periods presented. Non-interest income is adjusted to also exclude items that management believes are not comparable among the periods presented. Efficiency ratio is used as a method for management to assess its operating expense level and to compare to financial institutions of varying sizes. |
Management believes the use of non-GAAP measures will help readers compare National Penn’s current results to those of prior periods as presented in the accompanying Financial Highlights and financial data tables.
Cautionary Statement Regarding Forward-Looking Information:
This release contains forward-looking information about National Penn Bancshares, Inc. that is intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,’’ “project,” ”could,” “plan,’’ “goal,” “potential,” “pro forma,” “seek,” “intend,’’ or “anticipate’’ or the negative thereof or comparable terminology, and include discussions of strategy, financ ial projections, guidance and estimates (including their underlying assumptions), statements regarding plans, objectives, expectations or consequences of announced transactions, and statements about the future performance, operations, products and services of National Penn and its subsidiaries. National Penn cautions readers not to place undue reliance on these statements.
National Penn’s business and operations, as well as its business and operations following the completion of transactions described in this release, are subject to a variety of risks, uncertainties and other factors. Consequently, actual results and experience may materially differ from those contained in any forward-looking statements. Such risks, uncertainties and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following: increased capital requirements and other requirements or actions mandated by National Penn’s regulators, National Penn’s inability to meet the requirements of the memorandum of understanding or the individual minimum capital ratio requirements issued by its primary regulator, National Penn’s inability to successfully implement its “self-improvement plan”, National Penn’s ability to raise capital and maintain capital levels, variations in interest rates, deterioration in the credit quality of loans, the effect of credit risk exposure, declines in the value of National Penn’s assets and the effect of any resulting impairment charges, recent and ongoing changes to the state and federal regulatory schemes under which National Penn and other financial services companies operate (including the recently passed Dodd-Frank Act and regulations to be adopted to implement that Act), competition from other financial institutions, interruptions or breaches of National Penn’s security systems, and the development and maintenance of National Penn’s information technology. These risks and others are described in greater detail in National Penn’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, as well as in National Penn’s Quarterly Reports on Form 10-Q and other documents filed by National Penn with the SEC after the date thereof. National Penn makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances occurring or existing after the date any forward-looking statement is made.
